CHAPTER 279

FORMERLY

SENATE SUBSTITUTE NO. I

FOR

SENATE BILL NO. 355

AS AMENDED BY SENATE AMENDMENT NO. 3

AN ACT INSERTING A NEW CHAPTER 38 OF TITLE 12 OF THE DELAWARE CODE BY ENACTING A LAW RELATING TO THE TREATMENT OF DELAWARE BUSINESS TRUSTS.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section I. Amend Part V, Title 12, Delaware Code, by adding thereto a new Chapter

designated as 'Chapter 38" to read as follows:

"CHAPTER 38. TREATMENT OF DELAWARE BUSINESS TRUSTS Section 3801. Definitions

(a) 'business trust' means an unincorporated business association which (I) is
created by a trust Instrument under which property is held, managed, administered, controlled, invested, reinvested, and/or operated, or business or professional
activities for profit are carried on, by a trustee or trustees for the benefit of such person or persons as are or may become entitled to a beneficial interest In the trust property, including but not limited to a trust of the type known at common law as a 'business trust', or 'Massachusetts trust', or a trust qualifying as a real estate investment trust under Section 856, et seg., of the United States Internal Revenue Code of 1986, as amended, or under any successor provision, or a trust qualifying as a real estate mortgage investment conduit under Section 860D of the United States Internal Revenue Code of 1986, as amended, or under any successor provision and (ii) files a certificate of trust pursuant to Section 3810 of this Chapter. Any such association
heretofore or hereafter organized shall be a business trust and a separate legal entity.

(b) 'beneficial owner' means any owner of a beneficial interest in a business
trust, the fact of ownership to be determined and evidenced (whether by means of registration, the Issuance of certificates, or otherwise) In conformity to the
applicable provisions of the governing Instrument of the business trust.

(c) 'trustees' means the person or persons named In the governing instrument of
the business trust to manage the business and affairs of such business trust, and may Include the beneficial owners or any of them.

(d) 'person' means a natural person, partnership, limited partnership, trust,
estate, association, corporation, custodian, nominee or any other Individual or entity In Its own or any representative capa:fty.

Section 3802. ProhibltionAgainst Banking_and Insurance Business

A business trust may carry on any lawful business or purposes with the exception of the business of granting policies of insurance, or assuming Insurance risks, or banking as defined In Section 126 of Title 8 of this Code.

Section 3803. Liability of Beneficial Owners

Except to the extent otherwise provided in the governing instrument of the business trust, the beneficial owners shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit.

Section 3804. Legal Proceedings

A business trust may sue and be sued, and service of process upon one of the trustees shall be sufficient. In furtherance of the foregoing, a business trust may be sued for debts and other obligations or liabilities contracted or incurred by the trustees, or by the duly authorized agents of such trustees, In the performance of their respective duties under the governing instrument of the business trust, and for any damages to persons or property resulting from the negligence of such trustees or agents acting In the performance of such respective duties. The property of a business trust

shall be subject to attachment and execution as if It were a corporation, subject to Section 3502 of Title 10 of this Code.

Section 3805. Rights of Beneficial Owners In Trust Property

(a) Except to the extent otherwise provided In the governing Instrument of the
business trust a beneficial owner shall have an undivided beneficial Interest in the property of the business trust and shall share in the profits and losses Of the business trust In the proportion (expressed as a percentage) of the entire undivided beneficial Interest In the business trust owned by such beneficial owner as set forth in the records maintained by the trustees.

(a) No creditor of the beneficial owner shalt have any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the business trust, nor shall the death, incapacity, dissolution, termination or
bankruptcy of any beneficial owner be cause for the termination or dissolution of the business trust.

(b) A beneficial owner's beneficial Interest In the business trust is personal
property notwithstanding the nature of the property of the trust.

(c) A beneficial owner's beneficial interest In the business trust is freely
transferable except to the extent otherwise provided In the governing instrument of the business trust.

Section 3806. Management of the Business Trust

The business and affairs of the business trust shall be managed by Its trustees. To the extent provided In the governing Instrument of the business trust, the beneficial owners shall be entitled to direct the trustees In the management of the business trust.

Section 3807. Trustee in State

Every business trust shall at all times have a trustee which shall be a person who Is a resident of this State or which has a principal place of business In this State.

Section 3808. Existence of Business Trust

Except to the extent otherwise provided In the governing Instrument of the business trust, the business trust shall have perpetual existence.

Section 3809. Applicability of Trust Law

Except to the extent otherwise provided In the governing instrument of the business trust, the laws of this State pertaining to trusts are hereby made applicable to business trusts; provided, however, that for purposes of taxation under Title 30 of this Code a business trust shall be a corporation, an association, a partnership, or a trust, as shall be determined under the United States Internal Revenue Code of 1986, as amended.

Section 3810. Certificate of Trusti Amendment', Cancellation

(a) Every business trust shall file a certificate of trust In the Office of the

Secretary of State. The certificate of trust shall set forth:

(1) The name of the business trust;

(2) The name and the business address of the trustee required by Section 3807 of this Chapter; and

(3) Any other matters the trustee determine to Include therein.

The filing of a certificate of trust In the Office of the Secretary of State shall make it unnecessary to file any other documents under Chapter 31 of Title 6 of this Code.

(b) A certificate of trust may be amended by filing a certificate of amendment thereto In the Office of Secretary of State. The certificate of amendment shall set forth:

(I) The name of the business trust, and (2) The amendment to the certificate.

A certificate of trust may be amended at any time for any purpose as the trustees may determine. A trustee who becomes aware that any statement in a certificate of trust was false when made or that any matter described has changed making the certificate false in arty material respect, shall promptly file a certificate of amendment.

(c) A certificate of trust shall be cancelled upon the completion of winding up of the business trust and Its termination. A certificate of cancellation shall be filed In the Office of the Secretary of State and set forth:

(1) The name of the business trust;

(2) The date of filing of Its certificate of trust;

(3) The future effective date or time (which shall be a date or time certain) of cancellation if It is not to be effective upon the filing of the certificate; and

(4) Any other information the trustee determine to include therein. Section 3811. Execution

fa) Each certificate required by this Chapter to be filed in the Office of the

Secretary of State shall be executed in the following manner:

(I) A certificate of trust must be signed by all the trustees;

(2) A certificate of amendment must be signed by one or more of the trustees meeting the requirements of Section 3807 of this Chapter; and

(1) A certificate of cancellation must be signed by all the trustees or, if
there Is no trustee, as provided In the governing Instrument of the business trust.

(b) The execution of a certificate by a trustee constitutes an oath or

affirmation, under the penalties of perjury In the third degree, that, to the best of the trustee's knowledge and belief, the facts stated therein are true.

Section 3812. Filing

(a) The original signed copy. together with a duplicate copy, which may be either a signed or conformed copy, of the certificate of trust and any certificates of amendment or cancellation shall be delivered to the Secretary of State. Unless the Secretary of State finds that any certificate does not conform to law, upon receipt of all filing fees required by law he shall:

(1) Certify that the certificate of trust, the certificate of amendment or the certificate of cancellation has been filed In his office by endorsing upon the original certificate the word 'Filed', and the date and hour of the filing. This
endorsement Is conclusive of the date and time of Its filing In the absence of actual fraud;

(1) File and index the endorsed certificate; and

(1) Return the duplicate copy. similarly endorsed, to the person who flied it
or his representative.

(b) Upon the filing of a certificate of amendment In the Office of the Secretary

of State, or upon the future effective date or time of a certificate of amendment as provided for therein, the certificate of trust shall be amended as set forth therein, Upon the filing of a certificate of cancellation, or upon the future effective date or time of a certificate of cancellation as provided for therein, the certificate of trust shall be cancelled.

(c) A fee as set forth In Section 3813(a)(2) of this Chapter shall be paid at the

time of the filing of a certificate of trust, a certificate of amendment or a certificate of cancellation

(d) A fee as set forth in Section 3813(a)(3) of this Chapter shall be paid for a certified copy of any paper on file as provided for by this Chapter, and a fee as set forth In Section 3813(a)(4) of this Chapter shall be paid for each page copied.

Section 3813 fees

(a) No documents required to be filed under this Chapter shall be effective until the applicable fee required by this Section is paid. The following fees shall be paid

to and collected by the Secretary of State for the use of this State:

(1) Upon the receipt for filing of an application for reservation of name, an application for renewal of reservation, or notice of transfer or cancellation of reservation pursuant to Section 3814 of this Chapter, a fee to the amount of $50.

(2) Upon the receipt for filing of a certificate of trust, a certificate of amendment or a certificate of cancellation, a fee In the amount of $100.

(1) For certifying copies of any paper on file as provided for by this
Chapter, a fee In the amount of $10.00 for each copy certified.

(2) For issuing further copies of instruments on file, whether certified or not, a fee In the amount of $1 per page.

(b) Except as provided by this Section, all other fees for the Secretary of State shall be as provided for In Section 2315 of Title 29 of this Code.

Section 3814. Use of Names Regulated

(a) The name of each business trust as set forth in its certificate of trust must be such as to distinguish It upon the records of the Office of the Secretary of State from the name of any corporation, limited partnership or business trust reserved, registered or organized under the laws of this State or qualified to do business or registered as a foreign corporation or foreign limited partnership In this State; provided, however, that a business trust may register under any name which Is not such as to distinguish It upon the records of the Office of the Sescretary of State from the name of any corporation, limited partnership or business trust reserved, registered or organized under the laws of this State or qualified to do business or registered as a foreign corporation or foreign limited partnership In this State with the consent of the other corporation, limited partnership or business trust, which written consent shall be flied with the Secretary of State.

(b) The exclusive right to the use of a name may be reserved by: (I) Any person intending to form a business trust and to adopt that name; and

(2) Any business trust registered In this State which proposes to change Its

name.

(a) The reservation of a specified name shall be made by filing with the Secretary of State an application, executed by the applicant, together with a duplicate copy, which may be either a signed or conformed copy, specifying the name to be reserved and the name and address of the applicant. If the Secretary of State finds that the name Is
available for use by a business trust, he shall reserve the name for the exclusive use of the applicant for a period of 120 days. Once having so reserved a name, the same applicant may again reserve the same name for successive 120 day periods. The right to the exclusive use of a reserved name may be transferred to any other person by filing In the Office of the Secretary of State a notice of the transfer, executed by the applicant for whom the name was reserved, together with a duplicate copy, which may be either a signed or conformed copy, specifying the name to be transferred and the name and address of the transferee. The reservation of a specified name may be cancelled by filing with
the Secretary of State a notice of cancellation, executed by the applicant or transferee, together with a duplicate copy, which may be either a signed or conformed copy, specifying the name reservation to be cancelled and the name and address of the applicant or transferee. A duplicate copy flied with the Secretary of State as required by thls Subsection shall be returned by the Secretary of State to the person who filed It or his representative with a notation thereon of the action taken with respect to the Original copy thereof by the Secretary of State.

(a) A fee as set forth In Section 3813(a)(1) of this Chapter shall be paid at the time of the initial reservation of any name, at the time of the renewal of any such reservation and at the time of the filing of a notice of the transfer or cancellation of any such reservation.

Section 3815. Severabliltv

If any provision of this Chapter or its application to any person or circumstances Is held invalid, the invalidity does not affect Other provisions or applications of this Chapter which can be given effect without the invalid provision or application, and to this end the provisions of this Chapter are severable."

Section 2. This Act shall become effective on October 1, 1988 with respect to business trusts created on or after such date. This Act shall have no effect on the validity, powers, rights or liabilities of common law business trusts created before or after October 1, 1988 or the trustees or beneficiaries thereof. Common law business trusts created before or after October 1, 1988 may elect to be governed by the provisions of this Act upon the filing of a certificate of trust. provided, however, a common law business trust created before October 1, 1988 shall not be governed by the provisions of this Act to the extent of any inconsistent provisions contained in its governing instrument and not thereafter modified by amendment.

Approved June 21, 1988.